With the looming trade war between the United States and other countries, there has been considerable uncertainty surrounding shipping, receiving, and taxation of imported goods. Many people are confused, so I will do my best to clarify the situation for the community. The primary question I have received from many individuals is whether these potential tariffs will affect our operations or shipping practices. The short answer is: absolutely not. These tariffs will primarily impact the recipient in the United States, not us at the production or shipping level.

The basis of tariffs relates to the collection of taxes on packages arriving in the United States based on their declared value. Currently, there is an exemption for packages worth less than $800, which allows them to enter the U.S. without incurring additional tariffs. Confusion arose when it was announced that this exemption would no longer apply, and every package, regardless of its declared value, would be subject to a 10% tariff upon arrival in the United States. However, there was no clear explanation of how this tariff would be collected or who would be responsible for managing the funds.

This announcement caused a significant amount of chaos, leading USPS to temporarily announce that they would no longer accept packages from China and Hong Kong. Fortunately, within a couple of days, they revised their decision, and it was clarified that the exemption for packages under $800 would remain in place.

So, what will happen if these tariffs are eventually implemented?

Practically speaking, if tariffs are enforced, when a package arrives at customs, an additional 10% of the declared value will be added and collected from the recipient by the delivery company. For example, if the declared value of your package is $50, and the tariffs are imposed, you would need to pay an additional $5 to receive your package. This $5 represents the 10% tax mandated by the new regulation. The delivery company, such as FedEx, would collect this amount from you as a condition for releasing the package.

The $5 would then be sent to the appropriate agency responsible for tariffs; however, there remains uncertainty about which agency that will be, given the many changes happening domestically. Moreover, a reliable mechanism will need to be established to ensure that the collected funds are directed to the right agency.

A significant concern at the moment is that organizations like USPS may not have the proper systems in place for handling these collections, nor sufficient manpower to effectively manage the process. Additionally, this would place an enormous burden on customs offices to review every package, regardless of its declared value, which would likely necessitate a substantial increase in staffing. Without such a boost, delays in package processing could become significant.

It is crucial to emphasize that this system can be implemented, as similar rules exist in countries like Canada, the U.K., Australia, and much of Europe. Each of these nations has developed its own system for collecting customs fees upon package entry. While these systems may differ by country, our experience shows that many countries have successfully instituted systematic collection processes. This means that, before receiving their packages, recipients are required to pay the applicable customs fees based on the declared value of the items.

This situation is important for two main reasons. First, delivery companies like UPS, FedEx, and DHL are already accustomed to conducting tariff collections and have established systems that they have successfully tested worldwide. Therefore, they could rapidly implement similar collection processes in the United States if needed.

Second, while we may believe that the additional fee for an order will only amount to the $5 tariff, the reality is more complex. The courier companies will handle Customs clearance and collection and charge the recipient for this service. For instance, a package shipped to Germany will arrive at the port of entry, where the courier company will process customs clearance and prepay any applicable taxes, which can be as much as 20%. Afterward, they will contact the recipient to collect both the duty fees and a service fee, which could either be a percentage of the package’s actual value or a flat fee.

For troopers who believe that it may be easier to send packages through the national mail system — which is less likely to handle the collection and delivery of duties — Belgium and the UK serve as good examples. In both countries, any package entering the country is automatically taxed based on its content value. The national postal systems will then inform the recipient that a package is ready for collection or delivery, but the tax must be paid first. Not only do recipients need to pay the tax, but they also have to pay a service fee. The basic service fee can be as steep as US$25, regardless of the package’s declared value, even if it is only US$10.

To better understand how this process works, let’s consider a hypothetical sale and follow the associated costs for the trooper.

Suppose you buy a pair of shoes for US$99.90, and the shipping cost is US$45.

Typically, as an American trooper, your costs are as follows:

At this point, you’ll need to pay a 10% duty fee. This 10% is applied not just to the US$99.90 but on the total amount paid, which is US$144.90. Thus, the customs fees come to US$14.49. Since we are using a courier company (for example, FedEx), they will collect the duty and apply an additional service fee. For the sake of this argument, let’s apply a 10% service fee to the total sum of US$159.30 (which includes the item cost and customs fees). Therefore, the service fee will be US$15.93.

In this example, the total amount paid would be US$175.20, which is an additional US$30.30 compared to what troopers typically pay. This represents roughly a 25% increase over current costs.

So what can we do to limit the impact on troopers?

Some troopers mistakenly believe that if they send packages as gifts, they will not incur additional taxes. However, this loophole has long been closed by customs offices, which no longer validate such claims.

It is also common for prop makers worldwide to receive requests from troopers to undervalue the content of a shipment. This practice can potentially lower the tax charged by receiving customs, but it is fraught with risks and legal implications.